Earl Lee, president of Prudential Real Estate Affiliates, has masterminded a plan to put the Prudential real estate franchise corporation on top of the charts in online listings, lead generation and capture of referral fees.
The plan, which includes Pru’s purchase of online brokerage eRealty, makes Prudential the second major traditional franchise operation to open a national-level virtual office Web site with its own and its competitors’ listings.
The first effort was the Realty Executives Web site, which has a map of the states that links home searchers to framed Realtor.com or MLS Internet data exchange Web sites in local areas. It isn’t yet a full-blown VOW with all the listings in every location, but it may be only a matter of time until it is.
Lee wasn’t in the vicinity, but might as well have been listening last November when Realty Executives COO Bill Powers said: “Anybody who’s not building a VOW is nuts.”
The Prudential and RE/MAX International Web sites have property search functions powered by Realtor.com, but the results include only the franchise brokers’ own listings, not those of competitors. Ditto for the Coldwell Banker, Century 21 and ERA, which also have property search functions.
This sort of our-listings-only approach isn’t what home buyers want when they search for-sale properties. They want the entire MLS database in the local market, and they’ll hand over personal information to get it.
That’s what makes eRealty’s technology so appealing. The online maverick’s VOW requires user registration to comply with the National Association of Realtors’ policies and local MLS rules, but once the online paperwork is completed, the virtual door opens to virtually the whole MLS.
But eRealty’s system operates in only a dozen or so markets. ZipRealty has a similar system in 23 markets. Regional and local brokers operate VOWs throughout the country, but none of them is national in scope. Realtor.com and by extention MSN and AOL have a huge number of listings online, but they don’t actually show or sell those properties.
Will Prudential create a national VOW or will it be content with something less comprehensive (perhaps due to some MLSs’ noncooperation)? If the aim is true, are eRealty founder Russ Capper and the eRealty VOW technology the right man and the right vehicle to achieve it? Expanding the system from 160 eRealty agents to 46,000 Prudential sales associates won’t be easy or cheap.
Lee wants to have his cake and eat it too. Realty Executives’ Web site puts home buyers and sellers into direct contact with the local brokerage office. But Prudential will capture referral fees for VOW leads distributed to its brokers. The payment of such fees is a well-established practice and a business model relocation companies and dot-coms have implemented with success. Indeed, such payments seem to be attached to a higher percentage of realty transactions these days. Lee doesn’t expect Prudential’s VOW to generate as much traffic as, say, AOL and MSN. He just wants a piece of the action, and he thinks a Prudential VOW is the way to get it.
Brokers may grumble about the plan to collect referral fees. As one Prudential broker wrote to Inman News, “…feedback from many concerned brokers who truly understand the implications of this move involves the question of whether franchisors should be competing with franchisees for real estate buyers & sellers in the first place then selling them back to their members for a referral fee. What business are franchisors in anyway?”
Some brokers and salespeople will continue to shun the online lead referral systems because they have the savvy, the experience and the budget to generate their own leads without paying for such assistance.
But other brokers and salespeople will pay referral fees to capture business they believe they otherwise wouldn’t have obtained. Lee is betting Prudential brokers will opt to pay their own franchisor, i.e., Prudential, rather than any unaffiliated lead company. That’s a smart bet on a cool technology, but again, the payoff depends on Prudential’s ability to implement eRealty’s lead-generation system over a huge population of brokers and salespeople.
“If we can deploy (eRealty’s) technology into our network, we are providing our brokers the ability to access business that is floating around on the Internet, business our affiliates don’t have,” he said.
May the best VOW win.
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